"At this juncture, the board is unable to make a determination on whether a fraud has occurred in the company in respect of the matters covered in the investigation by the external legal firm, considering the limitations on the information available to the external legal firm and their qualifications and disclaimers as described in their investigation report,” said a company statement filed to the stock exchanges.
The board said that the Securities and Exchange Board of India (SEBI) and the Serious Frauds Investigation Office (SFIO) will likely determine if a fraud has occurred.
“We are unable to comment on regulatory non-compliances if any,” the board said.
The board has also stated that there may be additional related parties whose relationship with erstwhile directors (Malvinder and Shivinder Singh) were not disclosed to the company, and hence is not known to the management and there is an absence of all required information at this stage to draw an inference.
Meanwhile, auditor Deloitte Haskins & Sells LLP has raised a red flag over recognition of interest income aggregating Rs 44.34 crore on doubtful recovery of inter-corporate deposits and property advance, which is not in compliance with the norms and hence is over stated.
The auditor has raised doubts over whether loans and advances, whose recovery is uncertain, have been properly secured or are prejudicial to the interests of the group.
In another instance, Escorts Heart Institute and Research Centre Ltd had acquired 71 per cent equity interest in Fortis Healthstaff Ltd at Rs 3.46 lakh and subsequently the former advanced a loan to the latter which was used to repay outstanding unsecured loan amount of Rs 7.945 crore to a promoter company.
These transactions may also have been made to repay certain ICDs which were in question. The auditor said that the total amount paid towards acquisition of these shares and loans were much higher than the enterprise value of these companies at the time of acquisition as determined by the group.
Fortis Healthcare has incurred a net loss of Rs 63.72 crore during the year ended March 31, 2018 and various events during the year have adversely affected the company’s working capital position and credit rating.
The company’s current liabilities exceed its assets by Rs 146.66 crore. In June 2018, it had secured new line of credit facility aggregating Rs 125 crore and is in the process of securing additional line of credit of Rs 340 crore.
The board stated that the company has access to unencumbered assets that can be offered as a security for raising additional funding in future.